Why boss of scandal-plagued CBA retail bank got top job
Updated
On the face of it, this is an outrageously audacious move by Australia's biggest bank.
Plagued by scandals that have forced it and its competitors to come under the glare of a royal commission, it has decided to promote the current boss of the most scandal-plagued part of the organisation.
Matt Comyn was for a long time the golden child of the bank and heir apparent to current CEO Ian Narev. He was young, smart and highly ambitious.
But when the Austrac scandal broke last year, many thought he had suffered a career mortal wound, cruelling his chances of taking the top job.
The alleged breaches of money laundering and terrorism financing legislation was the latest in a series of scandals that had highly damaged brand CBA.
The installation of the so-called smart ATMs was botched with the organisation allegedly contravening the law more than 53,000 times.
These contraventions came under Mr Comyn's watch as head of the retail bank.
Orthodox thinking was that the Commonwealth Bank would look to break with its scandal plagued recent past in its choice of CEO to follow Mr Narev's stint.
To appoint a cleanskin from outside the bank to ensure that they were not saddled with a sordid history. Instead, the board has doubled-down.
Today, chair Catherine Livingstone argued the appointment in part stemmed from a desire to ensure the "strong aspects" of the CBA's "culture" were not lost.
She named credit risk, market risk, liquidity risk and a "focus on the customer" as key strengths.
Many of CBA's critics and those customers who have been victim to "rogue" financial planners might not agree.
Logic behind the appointment
But the promotion does have a certain logic to it. Appointing an outsider was always high risk.
New appointees tend to want to do due diligence on the organisation they are joining. To understand if there are any landmines waiting to be uncovered.
New CEOs also have a habit of uncovering skeletons in cupboards and making major changes to management and structures — to root out problems from the start and avoid damage further down the track.
Normally, a chair and board welcome this approach.
They want a new hire to look like they are making a difference and getting the job done.
That is in usual circumstances. These are not usual circumstances.
The bank will already have a royal commission attempting to shine a light on the murky dealings of the organisation.
It is arguable the last thing chair Catherine Livingstone and the board want is for someone to come in and disclose even more problems to the public.
When an organisation is playing defence against a royal commissioner which is trying to uncover the next batch of major of scandals, there is a strong case the best leader to repel the attacks is the person who knows where strategic weaknesses lie.
Powerful royal commission and APRA inquiries
In his grilling by investors and media, Mr Comyn promised transparency and cooperation with both the royal commission and another inquiry being run by the banking regular APRA were at the top of his to do list.
The more powerful and coercive royal commission and APRA questioning pose a rather sterner test for all involved at the bank.
For his trouble, Mr Comyn will receive a base pay of $2.2 million plus the possibility of short-term incentives of up to another $2.2 million and long-term incentives of $4 million to be reviewed at the 2018 annual general meeting.
Perhaps most interestingly, he isn't being signed to a time-defined contract as most CEOs are. Instead, both he and the organisation will just have to give one year's notice if they want to end the agreement.
The royal commission is currently set to only run for one year and its likely it will consume a great deal of the new CEO's time and resources.
Mr Comyn can expect to be regularly defending its conduct and attempting to contain the public fallout.
If at the end of that time the royal commission finds that the insidious parts of the bank's culture outweigh the good, it won't be that expensive or difficult for the CBA to go searching for a new CEO.
At only 42 years of age, Matt Comyn has taken on one of the biggest challenges in the Australian corporate world.
The promotion is high risk for both he and the bank.
They will need to convince a sceptical public that they are serious about tackling the bank's scandal plagued past.
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